Correlation Between NMDC and AGI Greenpac

Can any of the company-specific risk be diversified away by investing in both NMDC and AGI Greenpac at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining NMDC and AGI Greenpac into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NMDC Limited and AGI Greenpac Limited, you can compare the effects of market volatilities on NMDC and AGI Greenpac and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in NMDC with a short position of AGI Greenpac. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMDC and AGI Greenpac.

Diversification Opportunities for NMDC and AGI Greenpac

0.53

Correlation Coefficient

NMDC  AGI Greenpac

Very weak diversification

The 3 months correlation between NMDC and AGI is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding NMDC Limited and AGI Greenpac Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGI Greenpac Limited and NMDC is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on NMDC Limited are associated (or correlated) with AGI Greenpac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGI Greenpac Limited has no effect on the direction of NMDC i.e., NMDC and AGI Greenpac go up and down completely randomly.

Pair Corralation between NMDC and AGI Greenpac

Assuming the 90 days trading horizon NMDC is expected to generate 64.6 times less return on investment than AGI Greenpac. But when comparing it to its historical volatility, NMDC Limited is 57.54 times less risky than AGI Greenpac. It trades about 0.11 of its potential returns per unit of risk. AGI Greenpac Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  58,747  in AGI Greenpac Limited on September 9, 2024 and sell it today you would earn a total of  62,883  from holding AGI Greenpac Limited or generate 107.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.38%
Values	Daily Returns

NMDC Limited  vs.  AGI Greenpac Limited

NMDC Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NMDC Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, NMDC unveiled solid returns over the last few months and may actually be approaching a breakup point.

AGI Greenpac Limited

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AGI Greenpac Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, AGI Greenpac exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NMDC and AGI Greenpac

The main advantage of trading using opposite NMDC and AGI Greenpac positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMDC position performs unexpectedly, AGI Greenpac can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in AGI Greenpac will offset losses from the drop in AGI Greenpac's long position.

The idea behind NMDC Limited and AGI Greenpac Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.